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Prop331 - MGMT > w1-5 > Flashcards

w1-5 Flashcards

1
Q

Explain Strategy, in your own words and the importance fo strategy

A

Strategy is the conscious formulation fo the direction and scope of an organisation to achieve the organisation’s objectives over time through the optimal configuration of the organizations resources and competencies in light of the external, dynamic, environment.

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2
Q

What is the classic strategy model?

A

The classic strategy model is a very basic, three-pronged model of:

1) Strategic Location - where you will position
2) Strategic Choices
3) Strategic Actions

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3
Q

How is CREM set apart from typical property management?

A

CREM is set apart from PM as it relates specifically to the STRATEGIC management and optimization of an ORGANIZATION’S real estate assets to support the organizational goals.

PM, on the other hand, is more of an operational task, not strategic, and thus, is less focused on analysis and more on the day-to-day implementation & management. PM is also not inherently tied to corporations as CREM is.

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4
Q

Define facilities management in two words

A

Environmental Management

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5
Q

What are the three main asset forms that real estate takes for an organization?

A

It is:

1) A physical asset
2) A financial asset - reported on its balance sheet, affecting its solvency
3) An operational asset - for housing the operations and/or human resources of the firm

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6
Q

Define CREM

A

Corporate real estate management is the activity of optimally structuring the corporation’s real estate assets to support the goals of the firm.

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7
Q

Explain the three main strategic analysis tools for use, what their focuses are, and the outcomes of each tool.

A
  1. PESTEL
    - External contextualization
    - Polictical, Economic, Social, Technological, Environmental, Legal
  2. SWOT
    - External and internal contextualization and analysis
    - Outcome - know each strata’ factors and make decison
    - Combine to exploit opportunities using the strength of the firm
  3. Porter’s 5 Forces
    - INdustry attractiveness / level of competition
  4. The Marketing 5 C’s
    - Not covered much
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8
Q

What are the core tenets of strategic analysis?

A

1) Opportunity identification
2) Contextualization
3) Threat minimization

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9
Q

What is the motivation for a TOWS analysis over a SWOT?

A

Start with the external business enviroment before looking internally

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10
Q

What are some sources for competitor information?

A

Google & reviews, glassdoor, creditor reports, field observations, trade journals

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11
Q

What is the difference between IRR & IRRe

A

IRRe looks at the exact IRR on equity and helps combat some of the problems IRR has with negative cashflows and summaritive discount rates

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12
Q

How do you calculate yield/cap rate?

A

Although Cap rate is more technically from the investor perspective, if you derive it from the investment,

it is:

NOI / Sale Price

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13
Q

How do you calculate cash-on-cash return?

A

[ Net Operating Income - Debt Service] / Deposit

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14
Q

What is NPV?

A

NPV is derived from a DCF typically and is the surplus or defecit value after discounting the forecasted cash flows of an investment at the investor’s required rate of return / discount rate.

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15
Q

What are the shortcomings of IRR as a measurement?

A
  • When you have negagtive cashflows, it will create multiple IRR
  • Uses only one discount rate, in reality the discount rate of an investor changes with monetary changes – useful for short-term investments
  • Assumes reinvestment at the IRR rate – not realistic
  • Assumes static market environment
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16
Q

How do you calculate NOI?

A 
> Gross Revenue
- Vacancy Loss
= Net Revenue
- OPEX
= Net Operating Income
  • Debt Service
  • CAPEX
    = Cashw flow before debt, dep, and taxes
17
Q

What is meant by equity build up?

A

Leverage and pay off`

18
Q

What are the main considerations to make behind a buy vs lease decision?

A
  • Cultural / psychoological - [ownership desire[
  • Risk exposure
  • Agility
  • Cash flow
  • Management costs & focus ability on core competency
  • Business IRR vs IRR of property
  • Bespokeness of fitout
  • Stability of costs
  • inflation
    r
19
Q

What is Donaldson’s & Lasfer’s Curve?

A

A paradigm to showcase firm value and the leasing to buying propensity. Showing that firm value is maximize with 65% leasing.

20
Q

What are two unconvential methods for RE holding dispose?

A
  • Sale and leaseback

- Sale and manage back

21
Q

What is a company’s gearing ration?

A

TD / TE

22
Q

What is stakeholder theory? How does it differ to shareholder theory and who popularized shareholder theory?

A
  • Being multiple perspective

- Friedman

23
Q

Who were the academics who made the balanced scorecard?

A

Kaplan & Norton 1992

24
Q

What is the utility of the Balanced Scorecard?

A

It is a strategic performance management system that helps prioritise objectives in a multi-disciplinary manner and inform them for measurement with KPI’s.

25
Q

How is a Balanced Scorecard formed?

A

It is a top-down approach.

Starting with the visions and mission and breaking it down into the four perspectives

26
Q

What are the traditional four perspectives in a balanced scorecard?

A

1) Internal Process
2) Innovation, Learning & Growth
3) Customer Relationships
4) Finance

27
Q

What are some pros and cons of balanced scorecard?

A

Pros

  • Focus on high-value tasks FIRST
  • Provides a comphrehensive view for corporate operations for management
  • Alignment for strategy and execution
  • Accountable, quantifiable metrics
Criticisms
-	Time-intensive task
-	Metric heavy Analysis Paralysis
-	Involves arbitrary weighting setting
-	Management’s natural bias may weigh financial first
-	Isn’t a plan, but used to create one
-	Needs to be updated
Methodology:
28
Q

What are some good bases for benchmarking? What i benchmarking?

A

Benchmarking
Defined: A basis of establishing rational performance goals through the search for industry best practices that will lead to superior performance.

The Process

  1. Identify subject, partner (exterior focused), data
  2. Determine competitive gap & project future performance
  3. Communicate results and establish functional goals
  4. Develop action plans, implement and monitor and recalibrate

Some good measurements: Cost based, efficiency based, utilization-based, quality-based.

29
Q

What are some examples of property benchmarks?

A
  • JLL OSCAR Service Charge Benchmakr
  • e-PIMS Info Service
  • IPD Total Occupancy Costs Code
30
Q

What are some limitations of behcnmakring?

A

Cons

  • Retrospectivity
  • Best practice might be short-shooting in new industries
  • Will lead to herding
  • Not qualitative
  • Property is inherently inhomogeneous – e.g leasehold vs freehold
  • Different depreciation rates used by investors and international accounting disparities

Prop331 - MGMT (1 decks)

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